SBI Funds Management IPO: How SBI shareholders can improve chances of allotment

The SBI Funds Management IPO has opened for subscription and investor interest is expected to pick up over the remaining bidding period. One feature of the issue is a shareholder reservation category for eligible shareholders of State Bank of India (SBI). Investors applying through this category compete only with other eligible SBI shareholders, which can improve the probability of getting an allotment compared with the general retail category.

SBI MF IPO shareholder reservation

The IPO has reserved up to 1.3 crore shares or about 6.41% of the offer size, for eligible SBI shareholders. This quota is separate from the portions reserved for qualified institutional buyers (QIBs), non-institutional investors (NIIs) and retail individual investors (RIIs).


If the shareholder portion is not fully subscribed, the unallocated shares can be moved to other categories as specified in the IPO rules.

Who is eligible?

To apply under the shareholder category, an investor must have held eligible SBI shares on the record date specified in the IPO documents, that is the date of filing RHP (July 7). Buying SBI shares after the record date does not make an investor eligible for this reservation.

The shares must be held in the same demat account through which the IPO application is made.

How does this improve allotment chances?

In a normal retail application, investors compete with all retail applicants. Under the shareholder reservation category, eligible investors compete only with other SBI shareholders applying in that reserved portion.

If the shareholder quota receives relatively lower demand than the retail category, the chances of receiving an allotment improve. However, allotment is not guaranteed. It ultimately depends on the subscription level within the shareholder category itself.

Also Read: SBI Funds Management IPO opens for bidding. Check brokerage reviews, GMP, subscription status & other key details

Can investors apply in both categories?

Yes. Eligible SBI shareholders can submit one application under the shareholder reservation category, and another application under the retail category, subject to the applicable investment limits.

This allows an investor to participate in both pools independently, potentially improving the overall probability of allotment. However, multiple applications within the same category using the same PAN will be treated as duplicate applications and may be rejected.

Retail investors will continue to receive at least 35% of the net offer, while up to 50% of the issue is reserved for qualified institutional buyers.

Should investors buy SBI shares now?

The shareholder reservation is available only to investors who were eligible on the record date. Buying SBI shares after that date does not qualify an investor for the reserved quota in this IPO.

SBI MF IPO GMP

In the unlisted market, the company's shares are commanding a GMP of around 18% over the issue price.

With the issue subscribed 52% on the first day, investors will now closely watch demand across individual categories over the remaining subscription period, as that will ultimately determine allotment prospects.

The IPO is entirely an offer for sale of 17.10 crore shares by State Bank of India and Amundi. Since there is no fresh issue, SBI Funds Management will not receive any proceeds from the IPO. The money will go to the selling shareholders. After the issue, promoter and promoter group holding will fall to 89.8% from 98.2%, while public shareholding will rise to 10.2%, according to Anand Rathi.

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